Debt-Shy Europeans

New loans for graduate study may have limited appeal.

December 19, 2013

The take-up of much-anticipated loans for graduate students in Europe is likely to be limited because of an aversion to student debt in many countries, an expert on European education has warned.

From 2014-15, students in 33 European countries will be able to access bank loans of up to €12,000 ($16,500) a year to cover the cost of studying a one-year master's in a foreign country, with favorable rates available thanks to a guarantee from the European Investment Fund.

Over the next seven years, some 200,000 students are expected to access the loans.

But Barbara Kehm, professor of leadership and international strategic development in higher education at the University of Glasgow, has questioned whether students in some countries will take out the loans. "The idea of taking on a lot of debt to study is totally alien to German students," said  Kehm, a former director of the International Center for Higher Education Research at Kassel University, in Germany.

"They tend to study closer to home and do not want to incur additional costs," she added.

Students from Scandinavian countries shared the same antipathy toward tuition fee loans, while those from the Netherlands, France and Spain generally expected the state to pay for a large part of their studies.

Kehm also questioned whether many more students would use the loan plan to study in Britain, which is the most expensive place to study in Europe, according to a report released earlier this year.

The analysis by StudyPortals, which lists master's courses at European universities, showed that average tuition fees for such courses in Britain ($9,600) are three times higher than those charged in Switzerland ($3,100) and almost four times those in the Netherlands ($2,500).

Under the loan plan, which is opposed by the European Students' Union, students from any discipline will be able to access loans of up to €18,000 ($24,600) to cover the total cost of a two-year master's in any country apart from their own.

Banks have been invited to submit proposals to the European Investment Fund, with successful bidders likely to be announced in late spring or early summer 2014.

Dennis Abbott, spokesman for education at the European Commission, said the plan allowed banks to share the risk of loan default with the commission, making them more likely to lend to students with limited means. "The aim of this scheme is to ensure that it is not just a narrow group of students who benefit from master's study," he said.


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